carbon

Note:Only ETS (Emissions Trading Systems) or carbon tax are considered on this graph. Emissions are given as a share of global GHG emissions in 2012. Annual changes in global, regional, national, and subnational GHG emissions are not shown in the graph.

Some 2000 visitors from more than 100 countries are leaving Barcelona today at the end of Carbon Expo. The meeting, now in its 10th year, got off to a great start on Wednesday with the director of the World Bank´s Climate Policy and Finance unit, Mary Barton-Dock, welcoming the participants, followed by stimulating opening remarks from Christiana Figueres, executive secretary of the UN Framework Convention on Climate Change (UNFCCC).

Figueres urged the audience to continue building carbon markets and not wait for policy perfections. She also encouraged participants to continue making the case for carbon markets to policy makers, who have committed to a global agreement on emissions by 2015. She emphasized the importance for the private sector to more loudly voice their willingness and ability to move to a low-carbon growth trajectory and compared the carbon market to a tree planted just a few years ago, not possibly imagining that today it would have sprouted 6,800 projects registered with the UNFCCC in 88 countries, representing 215 billion dollars of investment.

However, Figueres also acknowledged the importance of domestic initiatives that were putting a price on carbon, at a time when a global agreement continued to challenge policy makers.

From the Chinese perspective, our MRP serves as a summary of the Government’s initial thoughts on how a domestic ETS would be established to cover the whole country. For this to happen, a lot of work needs to be done, and this proposal provides a framework and roadmap to guide us on our journey. We are expecting domestic and international institutions, experts and stakeholders from different levels to be involved in this design process. Above all, we hope to draw on the experience of existing carbon markets around the world as well as from the seven pilot ETSs - comprising five cities and two provinces - set to start this year in China. Facilitating continuous technical dialogues, PMR serves as a knowledge exchange platform for our team from China and all the participant countries. This is a unique and valuable experience.

An hour down a dirt road stands the most beautiful natural treasure in Kenya’s Western Province—the Kakamega Forest. The forest is a fraction of its former size, and it grows smaller every day because of the insatiable demand for firewood.

The transport sector, particularly in developing countries, plays a critical role in global energy consumption and greenhouse gas emissions reduction strategies – not only because transport sector emissions comprise nearly a quarter of global emissions today, but also because without pre-emptive action in developing countries, transport sector emissions may increase particularly rapidly, and the costs of future retroactive mitigation activities may be prohibitive.

Carbon governance—the institutional arrangements in place for mitigating greenhouse gas emissions—can vary considerably across countries. In Brazil, the financial community is actively interested in carbon trading, but Chinese banks have hardly any interest in it. In India, the Clean Development Mechanism (CDM) market is developed almost uniquely by domestic companies, while China relies extensively on foreign firms. And while the Chinese government takes an active interest in providing capacity to project developers, the Brazilian authorities see their role uniquely as guarantors of environmental integrity of emissions reductions projects. So, if carbon is the same everywhere, why is carbon governance so incredibly varied?

The participation of developing countries is essential for effective climate policy. But this participation is hampered by the fact that many developing countries perceive environmental policies as a new form of Malthusianism. And unfortunately, despite repeated references to sustainable development in the climate negotiations, the debates about climate and development policies continue to occur in separate spheres. A new Gordian knot has been tied through a succession of misunderstandings.

Economists may have caused some of these misunderstandings by laying out simple principles that are useful as a introduction to the underlying economic parameters of climate policies: first, a unique carbon price (through carbon taxes or a cap & trade system) to foster carbon saving behaviours without distorting international competition; second, compensatory transfers to offset the adverse impact of higher energy prices for the most affected countries. But this has resulted in climate policies being considered a cost-minimization exercise conducted regardless of the nature of development issues.

I saw one of the World Development Report’s recommendations in action yesterday. Kenya’s Green Belt Movement (founded by Professor Wangari Maathai) is working with the Kenya Forest Service, with support from the French Development Agency, a grant from the Government of Japan (PHRD) and carbon credits (both managed by the World Bank), to replant native forests.

Mercy Karunditu, Project Officer

The original forest had been cut down and a tough native grass had taken over. Patches of grass had to be cut in order to plant the seedlings of native trees and the grass constantly managed for the first years until the trees were strong enough. The team told us how the carbon credits were planned for 12 years from the start of the project, though it was clear that the trees would still be small at that point. Up front financing for a period of many years is clearly essential.

Project officer Mercy Karunditu told us of the multiple challenges the team faces in nurturing these seedlings. First, villagers grazing their animals on the land where the year old seedlings stand at just ankle height. Second, elephants which destroy the seedlings. Third, fires set by villagers in the native forests to encourage growth of new grass for their animals. And fourth, climate change.

“We used to be sure when the rains would come, now we cannot be sure and when they do come they are very strong and last only for a very short period,” Mercy said.

Getting the operational details right so that teams like this can succeed will be key to making this tool, which brings both mitigation and adaptation benefits, succeed.